Mumbai, Feb. 5: The precious yellow metal today broke all previous records and zoomed to an all-time high of Rs 6,000 per 10 gram in the local bullion market due to a sharp rally in global prices on renewed fears of war between the US allies and Iraq.
The apprehension was palpable on the eve of a crucial announcement by US secretary of state Colin Powell that Iraq is hiding banned weapons.
Due to a bull-run in overseas markets, gold touched a six-and-half year high level around $ 388.90 per ounce in London, a level not seen since September 1996, analysts said. This was followed by Hong Kong where gold touched $ 383 an ounce.
While gold touched an all-time high of Rs 6,100 per 10 gram in Delhi, the Calcutta bullion market saw the yellow metal soaring to Rs 6,110 per 10 gram.
In Mumbai market, standard gold touched Rs 6,000 per 10 gram and maintained that level on continued support, showing a whopping rally of Rs 85 over Tuesday’s close of Rs 5,915.
Ten-tola gold bar (.999 purity) also opened at a new high of Rs 70,350, but eased marginally to end at Rs 70,300, still the highest level ever for a gold biscuit. It was traded at around Rs 65,000 a month ago.
Bullion market observers here said that even as domestic prices touched a new high, it resulted in bringing a halt to professional bullion trade.
According to them, while imports are virtually nil since the past two weeks due to firm overseas prices, buying in the local market is also absent.
“Only sellers are now visiting jewellry shops. Therefore, the supply of scrap gold has dramatically increased over the past few days,” said a source.
Also, “ten tola gold bars have been sold at a discount of Rs 3,000 today,” a trader said.
“In view of the price disparity, there is a need for transparent pricing mechanism in the bullion markets,”said Bhargava Vaidya, a bullion analyst,
The panic buying in the world market had started on Tuesday itself. At the New York commodity division of the mercantile exchange gold bolted to a six-year high of $ 380 per ounce on waves of fresh buying.
According to some analysts, another reason for the sharp rally in prices was that foreign diplomats in Iraq were leaving the country as the US and the UK started a final diplomatic push to rally support for a possible war.
They now estimate that gold prices may touch $ 400 per ounce mark in other markets during the day. However, they also said that gold price may come down to around $ 360 per ounce if the war clouds disappear.
“Today’s rise came in the eve of Powell’s crucial announcement. If it turns out to be a damp squib, then prices could retreat,” a trader pointed out.
In the bullion market today, ready silver (.999 fineness) also resumed on a firm note at Rs 8,305, but fell back on fresh selling pressure and closed at Rs 8,295, a sharp rally of Rs 70 over the previous close of Rs 8,225.